In order to integrate concrete CSR commitments into corporate compliance programs, a company must establish how each commitment translates into performance requirements for the relevant business units and departments. The nature of these requirements may differ considerably depending on a company’s industry and operating context, and the extent and nature of their CSR commitments.
For example, a technology company focused on balancing the need to comply with national laws with a commitment to the principle of freedom of expression may prepare a detailed compliance guide for managers to follow in responding to government demands for the censorship of user-generated content. Whereas an extractive sector company may be more focused on establishing specific training requirements for security providers related to the proper use of force. Finally, an agricultural company seeking to demonstrate a commitment to operating responsibly in a world of scarce water resources may establish detailed requirements and performance targets for water usage at its processing facilities.
While the specifics for each company may be different, there are basic action steps that may be useful to those seeking to address the practical challenge of translating specific CSR commitments into measurable performance requirements:
Establish the Context for the Company’s CSR Commitments
- Understand the context and expectations for the company’s commitment. What are the legal, reputational, and operational risks that the company sought to address in making the commitment? Did the company make the commitment in response to specific stakeholder concerns? Is the commitment applicable to all of the company’s operations, or only to a specific product, region, or time period?
- Identify the specific standard to which the company has committed. What is the normative standard that the company has agreed to adhere to? What is the expectation of relevant stakeholders?
- Articulate what the standard requires in terms of corporate performance. What has the company committed to do, or not do? Is the company’s commitment applicable to all of the company’s operations, or only to a specific product, region, or time period?
- Identify business relationships, including with contractors, suppliers, and partners that may be impacted by implementation of the standard.
- Identify limitations on the company’s ability to perform in a manner consistent with the identified performance standard. Is the commitment contrary to specific national laws or contractual agreements that the company must observe? Are there ways of approaching the company’s performance commitments in a manner that would not contravene these restrictions?
- Utilize cross-functional working groups to assess the company’s performance objectives and to identify operational goals for each business department relevant to the standard.
Articulate Performance Requirements and Compliance Procedures
- Articulate the performance goals that the company must meet in order to demonstrate compliance with the standard. The company should also identify the performance requirements that must be communicated to those outside the company, including suppliers and contractors.
- Identify the specific implementation steps necessary to reach the performance goals. Specific implementation steps are likely to be wide-ranging and could include everything from revisions to specific policies to the construction of new physical infrastructure.
- Assess existing internal standards, policies, agreements, and compliance processes, and identify and implement any changes necessary in order to meet the identified performance goals.
- Identify the personnel that will be involved in carrying out these identified implementation steps and prepare any necessary guidance materials or training programs to support their efforts.
- Communicate the company’s expectations to relevant personnel. What do they need to do differently in order to help the company meet its performance goals? How will their performance be assessed?
- Develop reporting channels, as appropriate, to communicate information regarding the company’s performance to company executives and the board of directors.
Take Steps to Support, Assess, and Improve Performance
- Assess existing training programs, audit processes, grievance mechanisms and review procedures, and identify and implement any changes necessary in order to meet the identified performance goals.
- Establish procedures to document the company’s performance and to generate reporting to stakeholders, as appropriate.
CSR commitments and compliance programs both serve critical risk management functions for companies, especially in a context in which companies face considerable scrutiny from public and private stakeholders. Looking ahead, approaching CSR and compliance in an integrated fashion may significantly enhance corporate capacity to be responsive to stakeholder expectations now and in the future. By translating voluntary CSR commitments into clear performance goals against which compliance can be objectively assessed, companies will best be able to demonstrate the credibility and sincerity of their efforts to comply with both voluntary and mandatory standards. Ultimately, CSR and compliance have the potential to be mutually reinforcing.
Sarah A. Altschuller
Source: JDSUPRA Business Advisor